To stay in good shape, your finances need TLC. An assessment of
your net worth is a good starting point, says Steve Garrett, an
investment manager at St. Louis-based A.G. Edwards. "You need
to take an initial reading so you can compare from year to year and
uncover problems."

While the net worth equation--assets minus liabilities--sounds
simple, you should avoid common mistakes such as overstating the
value of a home. "You want to be conservative, not give
yourself a false sense of security," says Garrett.

An accurate assessment will reveal any financial faux pas, such
as lack of liquidity. "If everything is in IRA and 401K plans,
you don't have access to your money," says Garrett, who
advises putting 20 to 25 percent of assets in a nonretirement
savings account.

An undiversified stock portfolio is another red flag. "With
stocks, the rule of thumb is no more than 15 percent in any one
industry and no more than 5 percent in any one stock," says
Garrett, who adds that portfolio management varies by individual
goals. "You have to know your own risk tolerance."

Paperless Trails

Economists have long heralded a paperless world where invoices
cross the Internet in a heartbeat and payments fly back, saving
payer and payee costly paper processing and time-consuming data
entry. Yet widespread electronic billing presentment and paying
(EBPP) has remained a theoretical concept.

The transition from paper to Internet recently got a push from
an unlikely source: terrorists. Gartner Group recently reported a
20 percent uptick in enrollment in EBPP programs since the
nation's anthrax scares.

And with software programs such as QuickBooks coming bundled
with electronic invoicing functions, it's also easier for small
businesses to make the transition, says Peter Fader, associate
professor of marketing at the University of Pennsylvania's
Wharton School.

Are the benefits worth the payoff? "It depends on your
business," says Jim Bruene, founder and editor of
Seattle-based Online Banking Report. "If you send
enough invoices, the savings in paper and time can be
real."

But timing is everything. "Unless your client base is also
wired, you'll have to retrofit their system as well,"
Bruene warns. "It's a c hicken-and-egg thing."

Poor Forma

It was bound to happen. After years of a corporate mania for
using pro forma earnings to gloss over lackluster financial
performance, their rosy glow is waning. In the wake of the Enron
debacle, pro forma reporting came under heavy fire from all
quarters. Even the Securities and Exchange Commission decried the
use of company-issued pro forma reports to inflate earnings figures
by excluding multiple "one-time expenses"-a vague term
that included anything that management felt fit the bill.

"[Pro forma] became prevalent when companies, particularly
new high-tech start-ups, didn't have any earnings or had bad
losses and wanted to demonstrate that their operations were better
than they appeared to be," explains Ed Jenkins, chairman of
the Financial Accounting Standards Board (FASB), a private-sector
organization that works with the SEC to establish standards for
financial accounting and reporting. "A lot of pro forma
earnings were driven by sell-side analysts who were trying to
portray a company a certain way."

FASB is now developing performance-reporting guidelines.
"Companies should explain how they arrive at their pro forma
number and reconcile that number back to reported earnings so
investors [can decide] whether it makes sense," says
Jenkins.

Eventually, FASB hopes to eliminate pro forma reports
altogether. "If we do a good job on performance reporting
guidelines, there might not be a need for pro forma numbers,"
says Jenkins, who expects guidelines to be ready by year-end.
"Of course, the proof will be what actually happens."

Jennifer Pellet is a
freelance writer in New York City specializing in business and
finance.